US Economics Inflation Weekly

Citi Research analyzes the divergence in US inflation measures, noting that while core PCE reaccelerates, other indicators suggest underlying price pressures are gradually easing. The firm expects core PCE to show higher monthly readings than CPI while the labor market shows no signs of inflationary pressure.

Key Takeaways

• 1.The firm forecasts a 0.22% MoM increase in May core CPI and a 0.37% increase in core PCE, noting a divergence between various underlying inflation measures.
• 2.Despite recent job growth, the labor market does not appear to be retightening or a primary source of inflationary pressure, with wage growth slowing.
• 3.Debate among Fed officials and market participants regarding the 'correct' way to measure inflation continues as core PCE reaccelerates while alternative measures ease.

Table of Contents

• CITI'S TAKE
• Appendix A-1